The kiwi softened today as the greenback gained on the back of an optimistic economic speech by the US Federal Reserve chairman.
The kiwi closed at US65.13c from US65.60c at 5pm yesterday, having traded in a US65.04-US65.40c range today.
US Federal Reserve chairman Alan Greenspan delivered an upbeat report in the Fed's semi-annual report on monetary policy to the Senate Banking, Housing and Urban Affairs Committee. He reinforced market expectations that interest rates would continue to rise, albeit at a measured pace.
"The market had kind of been thinking with the weak economic numbers over the last couple of weeks it may have caused the Fed to rethink the next interest rate rise," a local dealer said.
"But last night he said the slowing of the economy was transitory and wouldn't have any effect on a measured interest rate increase."
Westpac chief dealer in New Zealand Basil Payn said there was selling of the euro, kiwi and aussie following Mr Greenspan's testimony. However, while New York traders pared back their long kiwi positions, there was steady buying out of Asia in the afternoon.
He said the market was unsure about the currency implications of the billion dollar deal involving Edison Mission selling its half stake in Contact Energy to Australia's Origin Energy. He said it was an offshore seller going to an offshore buyer, so it could be neutral for the currency.
"The market is wary," he added.
The Australian closed at US72.59c (US73.23c at 5pm yesterday) while the euro was buying US$1.2311 (US$1.2436). The greenback was buying 108.55 yen (108.67).
On the crosses, the kiwi was buying A89.70c (A89.58c last night), 35.18 British pence (35.17), 0.5290 euro (0.5275), 70.70 yen (71.29), and 0.8106 Swiss francs (0.8064).
The monetary conditions index was at plus 614 (628), while the trade-weighted index was at 65.52 (65.71).
Yields rose both in the money and debt markets thanks to Mr Greenspan's comments. Ninety-day bank bill yields rose to 6.28 per cent (6.26 per cent), February 2006 bonds rose to 6.02 per cent (5.98), July 2009s rose to 6.06 per cent (6.00) and April 2013s rose to 6.15 per cent (6.08).
- NZPA
<i>Currency:</i> Greenspan comments depress Kiwi
AdvertisementAdvertise with NZME.